Keep clients coming back · Every business
Refund and Cancellation Policies Customers Find Fair
A fair policy is short, posted before the customer pays and generous on the things the business controls, and research on return policies suggests that leniency brings in more sales than it costs in refunds.
A refund and cancellation policy that customers find fair says in plain words what they can cancel and by when, what they get back, how to ask and how fast the money arrives, and it is shown before they book or pay. Keep it to five or six sentences, match it to federal and state rules for your kind of sale and apply it the same way to every customer.
Refund and cancellation policy template
| Section | Wording to copy |
|---|---|
| Cancelling a booking | "You can cancel or reschedule at no charge up to [number] hours before your appointment by [text, email, online link]." |
| Late cancellation | "Cancellations within [number] hours may be charged [amount or share of the service], which we'll apply as a credit to your next visit when possible." |
| If something isn't right | "If you're not happy with the service, tell us within [number] days and we'll [redo, return visit, adjustment] at no charge." |
| Refunds | "If we can't put it right, we'll refund [full or partial amount] to your original payment method within [number] business days." |
| Deposits and packages | "Deposits apply to your service. Unused package sessions can be refunded at the regular single-session price, minus sessions used, for [number] months." |
| Memberships and recurring plans | "You can cancel your plan anytime by [the same method you used to sign up]; cancellation takes effect at the end of the current billing period." |
| How to ask | "Contact [phone or email]; we reply within one business day." |
Five checks before you post it
- Show it before payment. Put the policy on the booking page, the estimate or the signup form, and in the confirmation message.
- Make cancelling as easy as booking. A plan bought online should be cancellable online, and a booking made by text should be cancellable by text.
- Separate the fix from the refund. Offer to put the service right first, with the refund as the backstop, so most problems end in a return visit rather than a chargeback.
- Price unused sessions fairly. Refunding package sessions at the single-session price protects the package discount without keeping money for work you never did.
- Write down exceptions. Custom orders, special-order parts and services already delivered can be excluded, as long as the exclusion is stated up front.
The rules to check
Several federal rules shape refund wording. The FTC's Cooling-Off Rule gives customers until midnight of the third business day to cancel certain sales made at their home, workplace or a temporary location, such as a hotel room or fairground booth, for sales of $25 or more at home and $130 or more at temporary locations, with exceptions that include sales needed to meet an emergency and sales made entirely online, by mail or by phone. Under the FTC's guides on guarantees, "satisfaction guaranteed" and "money back guarantee" mean a full refund on request. The FTC's broader "click-to-cancel" rule for subscriptions was vacated by a federal appeals court on July 8, 2025, but the Restore Online Shoppers' Confidence Act still applies to online subscriptions, and more than half the states have automatic-renewal laws of their own.
General information, not legal advice; talk to a licensed professional about your situation.
Why it works
The research on return policies, the closest well-studied cousin of service refunds, finds that leniency pays. A meta-analysis of 21 studies in the Journal of Retailing found that lenient policies increased purchases, that they increased returns by a smaller amount and that leniency on time, such as a longer window to decide, actually reduced returns, while leniency on scope, such as accepting more kinds of items, increased them.
Sources
- Janakiraman, N., Syrdal, H. A. and Freling, R. The Effect of Return Policy Leniency on Consumer Purchase and Return Decisions: A Meta-Analytic Review. Journal of Retailing 92(2), 2016. 21 studies. Summary from the University of Texas at Dallas.
- Federal Trade Commission. Buyer's Remorse: The FTC's Cooling-Off Rule May Help.
- Federal Trade Commission. Guides for the Advertising of Warranties and Guarantees, 16 CFR Part 239.
- Greenberg Traurig. Eighth Circuit Vacates FTC's Click-to-Cancel Rule. July 2025.
Related reading: The No-Show Policy Wording to Copy, With or Without a Deposit · The Agreements Every Small Service Business Should Have in Writing · Service Guarantees: When They Pay Off for a Small Business
Email hello@osnovaops.com about your policies
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